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President Donald Trump has floated the idea of replacing federal income taxes with tariffs — a proposal that would dramatically change how Americans contribute financially to the government.
Real estate investor and private equity fund manager Grant Cardone believes such a move would be a huge win for middle-class families, putting more cash in workers’ pockets immediately.
Here’s why Cardone said eliminating federal income taxes could benefit the average American economically — and what to consider with the claim.
Take-home pay may increase due to abolition of income tax
Eliminating federal income taxes would allow workers to keep 100% of their earnings, immediately increasing take home pay without requiring a raise or job change. Cardone said that for middle-class workers who get paid twice a week, this change alone will result in a meaningful improvement in cash flow.
“Imagine giving up 100% of your paycheck every two weeks,” says Cardone, who will host it. 10X Wealth Summit on May 16 and 17 in Miami, GeoBanking told Reuters.
This change may be especially important for families with tight budgets.
Paycheck-to-paycheck workers may benefit most
A large portion of middle-class Americans live paycheck to paycheck, often struggling to cover unexpected expenses or rising everyday costs.
“A lot of people live paycheck to paycheck right now,” Cardone said.
From Cardone’s perspective, eliminating the income tax could provide financial relief without requiring people to work more hours or earn more money. Instead, higher net wages may simply ease short-term financial pressures by increasing the amount workers take home.
Cardone: Quality of life will increase rapidly
Cardone argued that removing the income tax would immediately improve the quality of life for at least the percentage of people who currently pay in taxes.
“No tax at all will not improve the quality of life of all (income tax-paying) people by at least 15%,” he said. “So wherever you are staying on rent, it will become 15% better. Whatever your food is now, it will become 15% better.
“If you’re paying 28% in taxes, your life will be 28% better,” Cardone said. “You’re going to get 28% better cars, housing, rent, food.”
Higher disposable income could drive US economic growth
Cardone believes that most middle-class Americans will spend their extra income, which could boost the economy overall.
“You’re not going to save money; you’re going to spend it because it’s like free money,” Cardone said. “So what will happen is that the GDP of this country will explode.”
That said, some economists question whether tariff revenues can fully replace the federal income tax or how higher import costs might affect consumer prices. Any changes to the US tax system would also require congressional approval and could take years to implement.
Abolishing income tax will not fix bad money habits
While eliminating the income tax could potentially benefit middle-class Americans, Cardone also stressed that personal financial responsibility would still matter.
“No matter what you spend your money on, you’ll still be living paycheck-to-paycheck,” Cardone said. “It’s not up to the government – it’s up to the individual. But if you give people more money, they will improve their quality of life.”
Even with higher take-home pay, Cardone argued that long-term financial stability will still depend on how individuals manage their spending and savings decisions.
Pros and Cons of Eliminating the Federal Income Tax
Cardone believes that replacing the income tax with a tariff would immediately increase household wages, boost consumer spending, and improve the quality of life for middle-class Americans. However, other experts question whether tariff revenues can realistically replace income taxes without unintended economic side effects.
While fundamental changes to the tax system could bring meaningful improvements to everyday financial life, they could also create new challenges along the way.